Assessing the role of economic instruments in a policy mix for biodiversity conservation and ecosystem services provision: a review of some methodological challenges

In this paper we review a number of methodological challenges of evaluating and designing economic instruments aimed at biodiversity conservation and ecosystem services provision in the context of an existing policy mix. In the context of the EU 2010 goal of halting biodiversity loss, researchers have been called upon to evaluate the role of economic instruments for cost-effective decision-making, as well as non-market methods to assess their benefits. We argue that cost-effectiveness analysis (CEA) and non-market valuation (NMV) methods are necessary, but not sufficient, approaches to assessing the role of economic instruments in a policy mix. We review the principles of “social-ecological-systems”(SES) (Ostrom et al. 2007) and discuss how SES can complement economic cost and benefit assessment methods, in particular in policy design research. To illustrate our conceptual comparison of assessment methodologies, we look at two examples of economic instruments at different government levels – payments for ecosystem services (PES) at farm level and ecological fiscal transfers to municipal /county government. What conceptual problems are introduced when evaluating policies in an instrument mix? How can the SES framework complement CEA and NMV in policy assessment and design? We draw on experiences from Brazil and Costa Rica to exemplify these questions. We conclude with some research questions.

[1]  E. Ostrom,et al.  A Grammar of Institutions , 1995, American Political Science Review.

[2]  S. Wunder Necessary conditions for ecosystem service payments , 2008 .

[3]  G. Cumming,et al.  Scale mismatches in social-ecological systems: Causes, consequences, and solutions , 2006 .

[4]  James S. Clark,et al.  Why environmental scientists are becoming Bayesians , 2004 .

[5]  P. T. Brink,et al.  The cost of policy inaction : the case of not meeting the 2010 biodiversity target , 2008 .

[6]  Ina Porras,et al.  All That Glitters: A Review of Payments for Watershed Services in Developing Countries , 2009 .

[7]  S. Wolf,et al.  Between Incentives and Action: A Pilot Study of Biodiversity Conservation Competencies for Multifunctional Forest Management in Finland , 2006 .

[8]  Frank Wätzold,et al.  Why be wasteful when preserving a valuable resource? A review article on the cost-effectiveness of European biodiversity conservation policy , 2005 .

[9]  S. Wunder,et al.  Designing payments for environmental services in theory and practice: An overview of the issues , 2008 .

[10]  S. Wunder,et al.  Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries , 2008 .

[11]  Stephen Smith,et al.  Evaluating Economic Instruments for Environmental Policy , 1997 .

[12]  S. Satyanath POLITICAL ECONOMY OF INSTITUTIONS AND DECISIONS , 2005 .

[13]  I. Ring Compensating Municipalities for Protected Areas: Fiscal Transfers for Biodiversity Conservation in Saxony, Germany , 2008 .

[14]  C. Spash How Much is that Ecosystem in the Window? The One with the Bio-diverse Trail , 2008 .

[15]  Theodor J. Stewart,et al.  Multiple criteria decision analysis - an integrated approach , 2001 .

[16]  C Levenstein,et al.  Environmental Economics , 2019 .

[17]  Alexander Moffett,et al.  Incorporating multiple criteria into the design of conservation area networks: a minireview with recommendations , 2006 .

[18]  Irene Ring,et al.  Protected Species in conflict with fisheries: The Interplay between European and National Regulation , 2006 .

[19]  Beth A. Middleton,et al.  Biodiversity and Ecosystem Functioning: Synthesis and Perspectives , 2004 .

[20]  Andrew Balmford,et al.  The Economics of Biodiversity and Ecosystems: Scoping the Science , 2008 .

[21]  The Use of Market Incentives to Preserve Biodiversity , 2006 .

[22]  H. Wittmer,et al.  On the ‘Efficient Boundaries of the State’: The Contribution of Transaction-Costs Economics to the Analysis of Decentralization and Devolution in Natural Resource Management , 2004 .

[23]  I. Bateman,et al.  Evaluating non-user willingness to pay for a large-scale conservation programme in Amazonia: a UK/Italian contingent valuation study , 2003, Environmental Conservation.

[24]  W. R. Shao,et al.  Bayesian Networks and Influence Diagrams: A Guide to Construction and Analysis , 2008 .

[25]  I. Seidl,et al.  Integrating biodiversity into intergovernmental fiscal transfers based on cantonal benchmarking: a Swiss case study , 2002 .

[26]  R. Costanza,et al.  Defining and classifying ecosystem services for decision making , 2009 .

[27]  M. Loreau,et al.  A new look at the relationship between diversity and stability. , 2002 .

[28]  John L. Herbohn,et al.  Bringing Agroforestry Technology to Farmers in the Philippines: Identifying constraints to success using systems modelling , 2008 .

[29]  J. Calvo-Alvarado,et al.  Deforestation and forest restoration in Guanacaste, Costa Rica: Putting conservation policies in context , 2009 .

[30]  A. Mather,et al.  Global Forest Resources , 1990 .

[31]  N. Landell-Mills,et al.  Silver bullet or fools' gold? A global review of markets for forest environmental services and their impact on the poor. , 2002 .

[32]  I. Ring Integrating local ecological services into intergovernmental fiscal transfers: The case of the ecological ICMS in Brazil , 2008 .

[33]  S. Polasky,et al.  CONSERVING SPECIES IN A WORKING LANDSCAPE: LAND USE WITH BIOLOGICAL AND ECONOMIC OBJECTIVES , 2005 .

[34]  Dragan A. Savic,et al.  An evolutionary Bayesian belief network methodology for optimum management of groundwater contamination , 2009, Environ. Model. Softw..

[35]  Irene Ring,et al.  Ecological public functions and fiscal equalisation at the local level in Germany , 2002 .

[36]  C. Perrings,et al.  Conserving Biodiversity: Reconciling Local and Global Public Benefits , 2003 .

[37]  David N. Barton,et al.  Bayesian belief networks as a meta-modelling tool in integrated river basin management -- Pros and cons in evaluating nutrient abatement decisions under uncertainty in a Norwegian river basin , 2008 .

[38]  Other Instrument mixes for environmental policy , 2007 .

[39]  M. Loreau,et al.  Biodiversity and ecosystem functioning : synthesis and perspectives , 2002 .

[40]  Stefano Pagiola,et al.  Selling Forest Environmental Services : Market-Based Mechanisms for Conservation and Development , 2002 .

[41]  E. Ostrom A diagnostic approach for going beyond panaceas , 2007, Proceedings of the National Academy of Sciences.

[42]  F. Neto,et al.  Using fiscal instruments to encourage conservation: municipal responses to the "ecological" value-added tax in Paraná and Minas Gerais, Brazil. , 2002 .

[43]  G. Munda Social Multi-Criteria Evaluation for a Sustainable Economy , 2007 .

[44]  S. Pagiola,et al.  Estimating the costs of REDD at the country level , 2009 .

[45]  Luis Rico García-Amado,et al.  Efficiency of Payments for Environmental Services: Equity and additionality in a case study from a Biosphere Reserve in Chiapas, Mexico , 2011 .

[46]  Eric F. Lambin,et al.  Spatial modelling of deforestation in southern Cameroon - Spatial disaggregation of diverse deforestation processes , 1997 .

[47]  Theodor J. Stewart,et al.  Multiple Criteria Decision Analysis , 2001 .

[48]  Deforestation Impacts of Environmental Services Payments: Costa Rica’s PSA Program 2000–2005 , 2008 .

[49]  M. Usher,et al.  Wildlife Conservation Evaluation , 1986 .

[50]  F. Sinclair,et al.  Local ecological knowledge and socio-economic factors influencing farmers' management decisions in jungle rubber agroforestry systems in Jambi, Indonesia , 2001 .

[51]  Arild Vatn,et al.  Institutions And The Environment , 2005 .

[52]  G. Sánchez‐Azofeifa,et al.  Costa Rica's Payment for Environmental Services Program: Intention, Implementation, and Impact , 2007, Conservation biology : the journal of the Society for Conservation Biology.

[53]  M. Grieg-Gran Fiscal Incentives for Biodiversity Conservation: The Icms Ecologico in Brazil , 2000 .

[54]  C. Hinojosa STUDY : Payments for Ecosystem Services in Costa Rica , 2022 .

[55]  E. Barbier,et al.  The forest transition: Towards a more comprehensive theoretical framework☆ , 2010 .

[56]  C. Margules,et al.  Nature Conservation: Cost Effective Biological Surveys and Data Analysis , 1990 .

[57]  S. Wunder,et al.  Is multiple-use forest management widely implementable in the tropics , 2008 .

[58]  C. Mantzavinos Individuals, Institutions, and Markets: Political Economy of Institutions and Decisions , 2001 .

[59]  Rik Leemans,et al.  Ecosystems and human well-being : policy responses , 2005 .

[60]  Miguel Martínez-Ramos,et al.  Integrating Agricultural Landscapes with Biodiversity Conservation in the Mesoamerican Hotspot , 2008, Conservation biology : the journal of the Society for Conservation Biology.

[61]  T. Sterner,et al.  Policy Instruments for Environmental and Natural Resource Management , 2002 .

[62]  P. J. Daugherty,et al.  What Makes Community Forest Management Successful: A Meta-Study From Community Forests Throughout the World , 2006 .

[63]  Monique Borgerhoff Mulder,et al.  Testing Hypotheses for the Success of Different Conservation Strategies , 2006, Conservation biology : the journal of the Society for Conservation Biology.

[64]  Muhammad Ibrahim,et al.  Paying for Biodiversity Conservation Services in Agricultural Landscapes , 2004 .

[65]  Junjie Wu,et al.  Voluntary conservation of endangered species: when does no regulatory assurance mean no conservation? , 2004 .

[66]  P. Glasbergen,et al.  Costa Rican Environmental Service Payments: The Use of a Financial Instrument in Participatory Forest Management , 2006, Environmental management.

[67]  R. Sierra,et al.  On the efficiency of environmental service payments: A forest conservation assessment in the Osa Peninsula, Costa Rica , 2006 .

[68]  S. Pagiola,et al.  Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America , 2005 .

[69]  Stefano Pagiola,et al.  Payments for Environmental Services in Costa Rica , 2008 .